MUMBAI: In recent times, a number of high net worth individuals have received calls or mailers from builders or websites to encourage them to invest in property. The deals sound lucrative, with annual returns of 12 per cent and other benefits.

For instance, a project by Rustomjee Builders in Thane offers rent for two years to buyers who book flats. The rent is Rs 18,000 a month for a 2-bedroom-hall-kitchen (BHK) flat andRs 25,000 a month for a 3-BHK one. Similarly, an advertisement for a commercial project in Noida offers assured annual return of 12 per cent on the invested amount. Why are builders offering to pay money to buyers to invest in property? According to Boman Irani, chairman and managing director of Rustomjee Group: “We are offering the buyer rental income for the time it takes to complete the project. This way, we are giving them confidence that the project will be completed in that much time. It is similar to the warranty in case of electronic goods or the delayed repayment in case of luxury cars,'' he says.

With most end-users, as well as retail investors, now being cautious about the 20:80 schemes and its variants, developers are now offering such innovative schemes to attract buyers, says Anuj Nangpal, managing director, Investor Services.

“From the developer’s perspective, such rentals or assured return schemes result in lower outflow or interest burden, as compared to the interest subvention schemes used earlier. But buyers must invest in such schemes after a detailed due-diligence on financial cost and the project,'' he says.

On the face of it, such an offer could look attractive. Yet, buyers should keep in mind that these are largely silent on cash flows after expiry of the period that is promised. It is also possible that the time for completion stretches beyond what is promised, and the developer not increase the rental for the extended period. Such schemes might appeal to someone looking to upgrade to a larger flat or someone staying on rent and looking to buy an apartment for self-use. In such cases, the buyer must only look at projects with a delivery timeline of two to three years. Anything more could be risky. In any case, buying a house in an under-construction property is always riskier than buying a ready property.

“From an investment perspective, such rental schemes provide a buyer with a return of less than two per cent per annum. While this does not look attractive when compared to other traditional investment options, capital appreciation during the project life cycle will be a key determinant for financial return. Therefore, a buyer must also evaluate the potential for real estate appreciation during the investment time frame to assess the return,” says Nangpal.

MUMBAI: Ganesh Kumar, a real estate consultant in the Andheri area here, recently bought a 2,200-sq-ft property in Pune and leased it to a financial services firm. “I invested in office property for the first time. I am getting returns of 12-13 per cent, which is very good,” Kumar says.

MUMBAI: The Maharashtra government is mulling a 10 to 25 per cent increase in the ready-reckoner (RR) rates for residential and commercial properties in Mumbai and the rest of Maharashtra from January 1, 2014. The revenue department has convened a meeting on Monday to explore various options in this regard.

MUMBAI: With the festival season turning lacklustre and with the RBI clampdown on 80:20 payment schemes and its variants, a good number of developers are increasingly opting for 'pre-launch' to lure buyers and to get their cash flows going. There is even a fancy name to this called 'soft launch'. Home buyers are flocking towards such schemes, unaware that the risks are greater than the discounts dangled before them. Legal experts term this 'illegal' while property consultants advise buyers to st

NAVI MUMBAI: The city has surged ahead in the race with Thane on the real estate front this year, with 8,845 units being up for sale in the last 12 months as against 5,406 units the previous year. A study done by Cushman and Wakefield (C&W), a global property consultant, revealed these statistics.

PUNE: There are around 32,000 residential and comamercil properties unassessed for property tax in Pune and Pimpri Chinchwad, revealed two separate surveys conducted by the municipal corporations. Of the 32,000 properties, 10,000 are in Pune municipal limits, while the remaining is in Pimpri Chinchwad.